The RBI added that the penalty shouldn’t be meant to pronounce upon the validity of any transaction or settlement entered into by the financial institution with its prospects.
RBI discovered that the financial institution did not hyperlink curiosity on floating price retail loans and loans to MSME to an exterior benchmark.
The Reserve Bank of India on Friday mentioned it has imposed a penalty of Rs 2.92 crore on Canara Bank for violation of assorted norms, together with linking rates of interest to exterior benchmark, and opening financial savings accounts of ineligible entities.
The Reserve Bank of India (RBI) carried out a statutory inspection for supervisory analysis of the financial institution close to its monetary place as on March 31, 2021.
“A scrutiny of the financial institution was carried out by RBI in July 2020 primarily based on a high-value fraud reported by one other financial institution,” the central bank said in a statement.
After scrutiny, the RBI found that the bank failed to link interest on floating rate retail loans and loans to MSME to an external benchmark and also failed to link interest on floating rate rupee loans sanctioned and renewed during financial year 2020-21 to its Marginal Cost of Lending Rate (MCLR).
The public sector lender, the RBI said, opened several savings deposit accounts in the name of ineligible entities, registered dummy mobile numbers in several credit card accounts, and failed to pay any interest on deposits accepted under the daily deposit scheme and prematurely withdrawn within 24 months of opening of the accounts.
The RBI also said the bank recovered SMS alert charges from customers, not on actual usage basis, and failed to undertake ongoing customer due diligence and put into use robust software for generating alerts when transactions were inconsistent with customer profile.
“In furtherance to the same, notices were issued to the bank advising it to show cause as to why penalty should not be imposed on it for failure to comply with the said directions, as stated therein,” the RBI mentioned.
After contemplating the financial institution’s replies to the notices and oral submissions made throughout the private listening to, the RBI mentioned it got here to the conclusion that the cost of non-compliance with the RBI instructions was substantiated and warranted imposition of financial penalty.
The RBI, nevertheless, added that the penalty on Canara Bank relies on the deficiencies in regulatory compliance and isn’t meant to pronounce upon the validity of any transaction or settlement entered into by the financial institution with its prospects.
(This story has not been edited by News18 employees and is printed from a syndicated information company feed)
